Risk Management
Increasingly, businesses are finding success in international markets. At the same time, international payments and currency exchange can increase your exposure to rapidly fluctuating economic conditions and their inherent risk: volatile currency markets can raise expenses, diminish profits, and make accurate long term planning virtually impossible.
To remain competitive, your organization needs to employ specific products and services that will help you properly manage this risk. Which should you choose?
“Hedging” is a strategy designed to minimize exposure to rapidly fluctuating currency markets while at the same time allowing a business to profit from an investment. There are several different ways to hedge your position; a few of them are outlined below.
If you’re just beginning, check out our comprehensive FX guide: FX 101.
Market Orders
Also known as a spot transaction, a market order is when you buy or sell currency at the current market rate, or spot rate. This type or transaction guarantees execution and it often involves a minimal premium due to the low amount of work involved.
Forward Contract
A forward is no different from a standard currency trade except that the settlement date is pushed forward into the future. This allows you to buy or sell currency up to a year in advance, and you always know what rate you will receive.
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Testimonial
Urban Barn - “Urban Barn was thrilled to discover Custom House’s online platform. It allows us to complete our international transactions from any computer 24 hours a day, 7 days a week. And even though we use the online services, the Custom House team is still in contact with us every day - we can book trades ourselves but get expert advice from the trading floor when we need it.”
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White Paper download
International Local Currency Payments - If you’re paying your international suppliers in USD and using foreign banks, you might want to read this whitepaper about an alternative strategy...
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Custom House In The News
Dollar, UK Pound Extend Fall Vs Euro
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